Financial Services

Regulation

?

Regulation
Measures legal and regulatory structures and how they affect businesses.More

Summary

It's no secret why Kenya-ranking 83rd as an economy, right after Guatemala and before Puerto Rico, according to the CIA Factbook—should be in the company of big, developed, and integrated markets like the United States and Canada, and city-state powerhouses like Singapore. The success of M-Pesa has created an alternative payment network in Kenya, making it, in terms of sheer usage, one of the most advanced markets in the world.

In Kenya, the the MasterCard Mobile Payments Readiness Index story is less about payment protocol than it is about the levels of usage and awareness M-Pesa has fostered there.

What you need to know:

Low Environment, Infrastructure, and Financial Services scores are part of the reason for M-Pesa's success

M-Pesa is closed loop; users must be Safaricom customers

Kenya has the world's highest rate of P2P payments familiarity at 89% and a reported usage level of 70%

Country Overview

Market Forces

Environment and infrastructure are issues in Kenya, but they need to be parsed carefully. The success that mobile money has had in these early days is attributable, in part, to a lack of a traditional infrastructure and alternative conventional payment media. Mobile suggested itself as a solution to a population deeply in need of a fast and secure method of payment.

Kenya was #1 in Consumer Readiness.

There's another consideration. M-Pesa is closed loop; this means that only M-Pesa (Safaricom) customers—consumers and merchants—can send or receive payments from each other. So it's early days in Kenya in more than one respect. They've shown the way globally, but the country itself is also ripe for a more flexible and accessible payments structure that leverages all types of payments and permits multilateral entry into a broader-based financial services and telecommunications infrastructure.

Consumer Sentiment

It's Kenyan consumers who have powered the east African nation to its position on the Index. Not only are Kenyan consumers leading the world in usage of P2P mobile payments, the success of M-Pesa has increased the awareness of all types of mobile payments.

It's not simply a matter of frequency. Kenya scores quite high (more than twice the Index average) for current use of m-commerce.

In all, Kenya scored highest in the Index on Consumer Readiness; and while its showing as eighth in the all-important Mobile Commerce Cluster score is impressive, it's important to remember that it has been precisely the deficiencies elsewhere in the Kenyan economy and banking system that have fueled consumer acceptance and usage of P2P. Kenya isn't first on the Index overall because it doesn't have the wherewithal to support m-commerce and POS—yet. But it does have a motivated and aware consumer base, and that's very important.

GLOBAL PERSPECTIVE ON CONSUMER SENTIMENT IN KENYA

Relative to the Index average and leading countries, how do consumers feel about mobile payments?

54% - France

Country ScoreIndex AverageLeading Country

MasterCard Conclusion

The success of mobile payments in Kenya is remarkable and can serve as a blueprint for payments adoption in the rest of the emerging world, where safety and inclusion are key goals. Nevertheless, Kenya is not leveraging the full range of solutions available for mobile payments. A further developed infrastructure can build on the solid foundation already in place.